It's Not Working: The Unemployment Insurance Crisis The nation's unemployment insurance order established 50 years ago last August.

It's Not Working: The Unemployment Insurance Crisis

The nation's unemployment insurance order established 50 years ago last August, is in a state of crisis. The vast majority of the jobles are not being provided benefits; the long-term unemploy are totally unprotected; employer have favorably convinced legislators to keep taxes reasonable benefits low and eligibility requirements high; and the Reagan Administration has taken actions and propos further gradations that will make the hypothesis more restrictive and less responsive to those in our society who are in the greatest degree in need of protection from the ravages of unemployment

Priority Issues

1 Decline in percentage of unemploy receiving benefits. At the current time, nearly 7 out of each 10 of the jobless are receiving nothing from the nation's unemployment compensation plan In October 1985, sole 26.6 percent of the unemploy received benefits, an all-time depressed In 1975, an average of 76 percent of the unemploy received benefits.

2 Long-term jobles have missed virtually all protection. Today alone 1 percent of those unemploy for 27 weeks or longer qualify for lengthen outed benefits (UC benefits beyond the normal 26 weeks of benefits provided at the states). Due to changes brought about from the Reagan Administration in the trigger mechanism, no other than the state of Alaska and Puerto Rico generally qualify for the federal/state protracted benefit program (up to 13 weeks of benefits beyond the regular benefit program operated according to the state).

3 Benefit evens are low. In 1985 the average weekly benefit amount in the United States was $122 This delineates 35 percent of the average weekly wage in defended employment ($347).

4 Employer taxes have declined. The ratio of wages expose to UI taxes was 98 percent in 1939 while today it is 36 percent This is individual of the most regressive of all taxes. The federal taxable wage base has been changed simply four times. Originally all sheltered wages were subject to the Federal Unemployment Tax Act (FUTA). In 1940 the FUTA tax was limited to the first $3000 Forty-six years later, in 1986 it is merely $7,000. The result has been chronic serious underfinancing of the system

5 Further intersects planned. New efforts being undertaken at the Reagan Administration, under the guise of quality rule shifting administrative costs to the states, and more onerous experience rating, can simply encourage the states to adopt more restrictions forward eligibility and harsher disqualifications, and impose more reductions and lower limits onward benefit levels.

Crisis in the System

forward average in 1984, just below 3 million of the more than 8-1/2 million unemploy received UI benefits in a less degree than the state regular benefit program and the federal/state programs for the long-term unemploy solitary 34.1 percent of the jobles got benefits--65.9 percent cruel through the cracks. They either failed to befitting qualification requirements or had previously exhausted benefits.

The record for 1985 is far worse. During five month in 1985 (June [i]or[/i] part of to the other October), fewer than 30 percent of the unemploy received benefits beneath all UI programs. Overall in 1985 just 336 percent of the unemploy got compensation from the classification This meant that during each month of the year more than 5-1/2 million of the jobles received nothing.

For the long-term jobles there is no protection afforded at the present system. There have been well in exces of 1 million long-term jobles (27 weeks or more) during each month of 1985. This does not include the discouraged or those working part-time on the contrary needing full-time employment. Ninety-nine percent of those abroad of work six months or longer realize nothing from the UI system

In a 1985 report for the National Governors Association, Wayne Vroman of the Urban Institute conclud that "although there have been widespread cutbacks in UI benefits, the largest reductions that have taken place have been in benefits paid to the long-term unemploy Sharp cutbacks in long-term UI benefits have occurr despite the fact that long-term unemployment was more prevalent in 1982 1983 and 1984 than in any other years since World War II."

As newly as 1975, over 76 percent of the unemploy were receiving benefits from either the regular program or united of the programs established to assist the long-term jobles Although there were fewer long-term unemploy in the mid 1970 lengthen outed benefits were being paid to an average of 535000 each week. Today, merely 12,000 of the long-term jobles qualify for like assitance (limited to those in Alaska and Puerto Rico).

According to Gary Burtles of the Brookings Institution, "some critics of unemployment insurance might fault the comparison with 1975-76 because benefits in that period were unusually generous, lasting up to 65 weeks irrespective of a worker's financial ne However, flat in comparison to earlier recessions when unemployment insurance was les generous, beenfits provided in 1981-82 secreteed an unusually small fraction of the unemploy reject during the comparatively mild recession in 1970-71 at least 56 percent of the unemploy received jobles benefits in each postwar recession through 1977."